The stock has recovered noticeably, largely pricing in a growing foundry pipeline that includes the multi-phase $119B "Terafab" project with commitments from Tesla, SpaceX, Nvidia, and Google.
While the immediate crisis has passed, the capital expenditures required for this expansion are substantial.
To fund this growth without overleveraging the balance sheet, Intel should consider issuing new shares while the equity market is strong. Here is the value investing thesis for why a capital raise right now is the most cost-effective path forward.
Management [previously tried selling partial factory stakes ](https://finance.yahoo.com/markets/stocks/articles/intel-buy-back-apollo-stake-130343809.html)to private equity, but they had to go back and spent $14.2 billion to reverse that choice.Intel had originally sold a 49% stake in Ireland’s Fab 34 to Apollo for cash. They recently bought it back because giving away nearly half the economics of a primary manufacturing asset proved too expensive over the long term.
With that approach set aside, the remaining options are debt or further asset sales. Intel already carries roughly $51.5 billion in gross debt (including the Apollo bridge loan).
Intel is trading at a historically high trailing valuation. The current share price reflects high expectations and does not fully account for the operational risks of ramping up the new 14A manufacturing node.
A 4% to 5% equity issuance at current market prices would raise approximately $25 billion in cash.
Intel should take advantage of a favorable market window to fully de-risk the execution of its foundry business. From a value investing perspective, prioritizing [balance sheet strength](https://intrinsicalpha.com/stocks/nasdaq/intc/semiconductors/intel-corporation-intrinsic-value/financials/balance-sheet) during a massive expansion phase is the safest route
What do you think?
